Kenya, straddling the equator in East Africa, plays host to a vibrant grains industry. Despite only 20% of its land being arable, agriculture forms the backbone of the nation’s economy, contributing significantly to its food security and employment. Maize is the most important grain grown in the country, but the country is also a notable producer of wheat and rice though its annual output is far below demand, hence the need for imports.
As the seventh most populous country in Africa, Kenya faces the crucial challenge of feeding its growing population amidst the realities of climate change and volatile global markets. This report delves into the intricacies of the Kenyan grains industry, exploring its current state, future potential, and the key challenges that lie ahead.
Maize status as main staple is slowly fading away.
Maize is the principal staple food in Kenya with per capita consumption estimated at 60kg (5kg per person per month), according to the 2019 Kenya Maize Flour Market Report. The status it previously enjoyed as a main stay at many dinners is, however, slowly fading away as many consumers diversify their meal options.
According to a Kenya Agricultural Value Chain Enterprises report by USAID, per capita maize consumption has been on a steady downward trend from about 90 kilograms in 2003 to 67.5 kilograms in 2012. The report projected consumption to decline further to 56.3 kilograms in 2022, as consumers increasingly substitute cooking bananas, Irish potato, sweet potato, and cassava in place of maize as a result of increasing incomes, and higher urbanization rates.
In the coming 2023/24 season, corn consumption is expected to recover to over 3.9 million MT from 3.7 million MT the year before due to increased local supply as more acreage is dedicated to corn. Kenya’s feed manufacturing sector – which has largely stagnated due to an inadequate supply and high cost of raw materials- is forecasted to utilize about 200,000 MT of the country’s total grain demand.
Maize production lags demand
Although per capita consumption is declining, population growth is contributing to a modest (1% per year) overall increase in aggregate demand for maize (including human consumption, animal feed, and other industrial uses), according to the USAID-KAVES Maize Value Chain Analysis.
Production is, however, not increasing fast enough to meet demand. In some years, production has actually contracted. In 2021, for instance, the production of maize decreased by 12.8% to 36.7 million bags, mainly due to unfavorable weather conditions in 2021. In 2022, the production volume of maize in Kenya declined further to 34.3 million bags as the country grappled with the worst drought in 40 years.
Recent data by the Kenya National Bureau of Statistics (KNBS) reveals that the production of Kenya’s number one staple food, maize, has fallen by a whopping 10.9 million in five years hampering the country’s food security efforts. According to the statistics bureau, maize production fell from 44.6 million bags harvested in 2018 to 34.3 million bags last year- the lowest it has been in over a decade.
Part of the reason for low production volume is reduced production potential of Kenyan soils. Average maize yields have declined from 2.2 MT/ha in the 1990s to 1.6 MT/ha in 2022. One of the reasons for this decline is inadequate use of fertilizers whose price has been skyrocketing well beyond the budget-limit of many farmers.
In addition, smallholder farmers often plant unsuitable varieties, have low use of complementary inputs, and have sub-optimal use of inorganic fertilizers. Added to this are the effects of unpredictable and unfavorable weather patterns compounded by limited access to water for irrigation, and increased pests and disease prevalence such as the Maize Lethal Necrotic Disease and Fall Army Worm.
With production contracting, data from the ministry of Agricultura indicates the country is normally faced with a deficit of around 12 million bags annually. USDA forecasts that MY 2023/24 imports will reach 750,000 MT, unchanged from MY 2022/23. While Kenya’s imports from regional EAC and Common Market for Eastern and Southern Africa (COMESA) countries are expected to remain high due to shortfalls in domestic production, exportable supplies from these countries will likely face limits in MY 2022/23 due to lower-than-average regional production.
Reliance on imports is only expected to go up as population growth is projected to push the demand for maize to 60 million bags by 2025.
Government intervenes to tame skyrocketing maize prices
During the five years, the price of maize flour per kilogram shot up from an average of KES 41.32 per kg in 2018 to KES 71.10 per kg in 2022, and more than KES 100.00 by July 2023.
Price hikes were mainly attributed to production shortfalls caused by drought, high fertilizer prices, and insufficient regional imports to stabilize prices. As prices crossed the KES 100 mark for the first time in Kenya’s history, the government was forced to intervene by relaxing duties on imports to plug the deficit and ease pressure on prices.
The Ministry of Agriculture, in December 2022 announced that traders would be allowed to import up to 900,000 tonnes of duty-free white maize from February to August 2023 to enable the country to have adequate stocks to last until the July to August 2023 harvest season.
The Government of Kenya has put in place various interventions to ensure the availability, accessibility, and affordability of maize in the country. For instance, it recently rolled out fertilizer subsidies in an attempt to reduce the cost of production and enhance its use to increase maize yield.
Beyond subsidies, the government also devoted KES 1.1 billion US$8M) for the electrification of the Galana-Kulalu Irrigation Scheme, a multi-billion-dollar irrigation scheme, as it moves to make the national food security project more attractive to investors. Additionally, the government announced that it has earmarked 500,000 acres of the state’s idle land for maize production in 2024. In April 2023, the government of Kenya further announced plans to put three million acres of land under irrigation farming by 2030 to bolster food security.
As a strategy to reduce reliance on maize imports, the Government of Kenya also embarked on diversification and floor blending of maize and wheat with sorghum, millet, cassava, and sweet potatoes.
The Kenya Bureau of Standards has been mandated to finalize standards, formulated by national, and county governments and development partners, that will guide the certification process of these products. Through the initiative, millers will be expected to mill 10 percent of their daily produce into blended flour.
Roadmap to Maize self-sufficiency
Kenya’s corn production is expected to increase in 2023-24 as farmers respond to high crop prices by planting more, according to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture (USDA). FAS estimates corn production to rise to 3.2 million tonnes in 2023/24 season, up from the new estimate of 2.9 million tonnes in 2022-23.
To argument the successes of the 2022/23 market campaign, the government has announced plans to support local farmers through post-harvest management to reduce recurring losses.The state recently set aside KES4 billion (US$27M) to purchase maize from farmers through the National Cereals and Produce Board (NCPB). This will not only boost strategic grain reserves but also avoid losses which in Kenya are estimated at between 10 and 12 percent of total production. The government is also encouraging private sector investment in grain warehouses to improve storage quality, and the Warehouse Receipt System Council (WRSC) recently licensed the first private warehouse receipt operator.
The country is also at liberty to cultivate and import genetically modified organisms (GMOs) after the Environment Court dismissed the case challenging the same.
Kenya leads in most developed milling mills and technology in ESSA
After Ethiopia, Kenya has the next largest and most developed milling industry in the Eastern Sub-Saharan Africa Region, processing 10 million metric tons of grain annually followed by Tanzania at 6 million tons, according to Rabobank, a leading food and agricultural sector finance bank.
Despite having the most developed sector, corn milling is highly fragmented where milling is characterized by limited installed capacity and domestic processing unlike Tanzania which is highly consolidated, fully liberalized, and enjoys healthy margins.
According to the Cereal Growers Association (CGA), there are 100 medium-scale millers and 23 large-scale millers in Kenya. The installed capacity of the medium-scale millers is between 100-200 MT per day, while for the large-scale millers installed capacity averages at 3,600 MT per day.
Among the large-scale millers in Kenya include Unga Group Holdings Ltd., Mombasa Maize Millers, Pembe Flour Mills Ltd, Capwell Industries Ltd, and Kitui Flour Mills among others.
Kenya far from wheat self-sufficiency
Retailers and millers cited by USDA note that wheat products such as pasta, cakes, and pastries are increasingly popular in Kenya. This has resulted in wheat becoming the second most important grain crop in the country with an average annual consumption of about 2.4 million MT, according to data from Agriculture and Food Authority.
In MY 2023/24, USDA forecasts low wheat consumption at 1.94 million MT. “Despite an expansion of restaurants and bakeries in the Nairobi region, overall wheat consumption has been negatively impacted by high domestic prices, with prices climbing to $446 per MT as of December 2022,” USDA stated in the report.
Production is however expected to rebound, benefitting from higher wheat prices. According to USDA, Kenya’s wheat production in MY2023/24 would increase to 310,000 tonnes mostly because of increases in harvested area as farmers plant more wheat to take advantage of high prices. In February 2023, wheat prices stood at US$462 per MT compared to US$417 per MT during the same month in 2022.
Kenya’s wheat yields however face challenges due to short-term land leases that disincentivize investment in soil and equipment. Production is also negatively affected by seed recycling and occasional outbreaks of Ug99 rust disease.
This dims any hopes for Kenya to ever achieve self-sufficiency in wheat production. USDA anticipates that wheat imports in MY 2023/24 will remain unchanged at 1.6 million MT as prevailing conditions such as disruptions associated with the Ukraine crisis, and Kenya’s deteriorating exchange rate in MY 2022/23 are likely to continue.
Kenya traditionally sources wheat from a wide array of sources, including Argentina, the Black Sea Region, Australia, and North America. According to traders, most of the wheat is currently bein sourced from Russia due to its competitive price compared to other sources offering wheat of comparable quality.
Kenya races to raise yields in rice as demand surge
Since its introduction in 1907 in Kenya, rice has become the third most important cereal crop after maize and wheat. Due to the progressive change in the eating habits of Kenyans, particularly in more urban areas, the annual consumption of rice is increasing at a rate of over 12% in the country.
In MY 2023/24, consumption is expected to continue to grow from 800,000 MT to 825,000 MT as individual households and institutions shift to rice as a food staple due to its lower cost and ease of preparation, according to USDA.
Domestically grown rice is however generally more expensive than imports, with premium rice from the Mwea Irrigation Scheme averaging US$1595/MT in 2022 while prices for rice from Pakistan averaged at US$393/MT.
Rice production in the 2023/24MY is anticipated to increase to 130,000 MT due to an expansion in area planted following the commissioning of the Thiba Dam in October 2022. Thiba dam supplies the Mwea Irrigation Scheme in Kirinyaga County which accounts for 80-88% of the country’s rice production.
With consumption almost 7 times local demand, Kenya relies on imports to meet its huge appetite for rice. In 2022, Kenya sourced its rice mainly from Pakistan (46%), India (34%), Tanzania (US$14%), South Korea (3%), and Thailand (2%).
Data by the Kenya National Bureau of Statistics (KNBS) has revealed that rice purchases reached a new record, nearly 120% in the first half of 2023. KNBS reported that traders ordered 702,249 metric tonnes of rice in 2023, a 118.31 percent jump over 321,670 tonnes in the same period last year. In MY2023/24, USDA anticipates imports will decline slightly to 690,000 MT as higher domestic production accounts for a larger portion of Kenya’s rice supply.
Kenya to increase rice acreage by 100,000 in 5 years
As demand for rice skyrockets, Kenya embarked on a 5-year plan to increase the acreage under rice production in the country by at least 100,000 acres as part of its efforts to achieve rice self-sufficiency. The recently completed Thiba dam is a great boost to this program as it is expected to expand the area under irrigation in Mwea by 10,000 hectares. This is expected to raise Kenya’s rice production to 250,000 metric tonnes annually.
The government has announced plans to revitalize two other rice schemes, Ahero and Budalangi, both in Western Kenya. These plans have not yet been implemented and no additional production is expected from these schemes in MY 2023/24. Their return to production in future is however expected to boost local production and help offset Kenya’s insatiable demand for imports.
In addition to the expansion and rehabilitation of existing irrigation schemes, the government is promoting the introduction of high-yielding rice varieties. Under this program, Paddy rice productivity under irrigation is targeted to increase from the current average of 4.0 to 7.5 t/Ha, rainfed upland from 1.5 to 2.5 t/Ha and rainfed lowlands from 2.0 to 3.5 t/Ha.
Traditional grains taking shape
With the increasing shockwaves in the common grain industry, the government of Kenya is changing gear towards traditional indigenous grains such as sorghum and millet in the hope of weaning the country from over dependence on maize.
Sorghum is climate resilient crop, making it particularly suitable to Kenya’s increasingly unpredictable weather. As of 2022, the country produced 135,000 metric tonnes of sorghum from 197,440 hectares. Production is expected to rise as more farmers embrace the crop due to its drought tolerant characteristics.
Millet production is set to surge as the government moves to implement the Millet Flour Blending program aimed at increasing utilization of climate resilient grains in the country. In 2022, the county recorded a paltry production of 63,063 tons of millet from at least 106,233 ha of farmland, according to the Ministry of Agriculture. As the government pushes millers to increase utilization of the grain, the country’s Millet Production is projected to grow by 2.2% year-on-year, reaching 138,280 metric tons in 2026.
This feature appeared in ISSUE 7 of MILLING MIDDLE EAST & AFRICA MAGAZINE. You can read this and the entire magazine HERE
